Tuesday, August 26, 2014

ACA/Obamacare: Welcome to Form 1095A, The Health Insurance Market Place Statement

'Taxes? Who wants to think about taxes around Labor Day?But if you count on your tax refund and you're one of the millions getting tax credits to help pay health insurance premiums under President Obama's law, it's not too early.Here's why: If your income for 2014 is going to be higher than you estimated when you applied for health insurance, then complex connections between the health law and taxes can reduce or even eliminate your tax refund next year.’‘The danger is that as your income grows, you don't qualify for as much of a tax credit. Any difference will come out of your tax refund, unless you have promptly reported the changes.Nearly 7 million households have gotten health insurance tax credits, and major tax preparation companies say most of those consumers appear to be unaware of the risk."More than a third of tax credit recipients will owe some money back, and (that) can lead to some pretty hefty repayment liabilities," said George Brandes, vice president for health care programs at Jackson Hewitt Tax Service.Two basic statistics bracket the potential exposure:• The average tax credit for subsidized coverage on the new health insurance exchanges is $264 a month, or $3,168 for a full 12 months.• The average tax refund is about $2,690.’‘Concern about the complex connection between the health care law and taxes has increased recently, after the Internal Revenue Service released drafts of new forms to administer health insurance tax credits next filing season.The forms set up a final accounting that ensures each household is getting the correct tax credit that the law provides. Various factors are involved, including income, family size, where you live and the premiums for a "benchmark" plan in your community.Even experts find the forms highly complicated, requiring month-by-month computations for some taxpayers.Note: The following is a link to the IRS draft of form 1095A:http://www.irs.gov/pub/irs-dft/f1095a--dft.pdfTaxpayers accustomed to filing a simplified 1040EZ will not be able to do so if they received health insurance tax credits this year.’ Some highlights:—You may have heard that the IRS cannot use liens and levies to collect the law's penalty on people who remain uninsured. But there is no limitation on collection efforts in cases where consumers got too big a tax credit. If your refund isn't large enough to cover the repayment, you will have to write the IRS a check. "They are not messing around," Brandes said.—Health insurance is expensive, and with that in mind, the repayment amount the IRS can collect is capped for most people. For individuals making less than $22,980 the IRS can only collect up to $300 in repayments. That rises to $750 for individuals making between $22,980 and $34,470. For individuals making between $34,470 and $45,960, the cap is $1,250.For families, the cap is double the amount that individuals can be charged, but the income thresholds vary according to household size. An IRS table may help simplify computation, which is based on the federal poverty levels for 2013.—There is no collection cap for households making more than four times the federal poverty level. They face the greatest financial risk from repayments, because they would be liable for the entire amount of the tax credit they received.Those income thresholds are $45,960 and above for an individual, $78,120 and above for a family of three, and $94,200 for a family of four. Ciaramitaro says people facing that predicament should try to minimize their taxable income through legal means, such as putting money into an IRA. The IRS says it will work with taxpayers who can't pay in full so they understand their options.’- Tax refundsmay get hit due to health law credits, USA Today, 08/24/2014Link to the entire article appear below:http://www.usatoday.com/story/money/personalfinance/2014/08/24/tax-refunds-may-get-hit-due-to-health-law-credits/14529169/

1 comment:

ky health cooperative insurance co filed bankruptcy and I have been trying for over a month to get a form 1095 A and have been unsuccessful I have contacted the ins. co the state ins. commissioner and kyconnect time is running out to file I need answers for Sharon l. weaver

About Me

BS Economics, cum laude, Private and Public Sectors, 1979, West Virginia University, Morgantown, WV.
Undergraduate Minor in General Insurance.
Chartered Life Underwriter (CLU), Huebner School of Economics, American College, 1992, Bryn Mawr, PA.
Life Underwriter Training Fellow (LUTCF), 1986, National Association of Life Underwriters, Washington D.C..
Currently enrolled and completed one half of Chartered Property and Casualty Underwriter (CPCU) from the American College.
38 years insurance industry experience.